The cabinet, on Sunday, has approved the sale of the government’s stake in SME Development Finance Corporation (SDFC) to the Bank of Maldives (BML).

In a press release, the President’s Office announced that the decision was made following BML’s expression of interest in acquiring the government’s stake in SDFC. The Office highlighted that this strategic move was based on a thorough review of a research paper submitted by the Ministry of Finance and Planning, which outlined the proposal’s potential benefits.

According to the President’s Office, the primary objective of the sale as to ensure uninterrupted lending to small and medium enterprises (SMEs), which it highlighted as a key priority to the government.

BML, in its proposal, committed to lending MVR 500 million in the first year, with a target of MVR 1.9 billion over the next five years, and an allocation of MVR 300 million to support business start-ups over the next three years.

The President’s Office said SDFC will operate as an Islamic financial institution in accordance with Shariah principles and will implement a modern digital banking system following the acquisition, adding BML will maintain current interest rates on SME loans, aiming to foster a business-friendly environment while strengthening financial capacity and operational efficiency.

The President’s Office said the transition will enable the expansion of digital SME financing services across the country through BML’s extensive network. It emphasized that under BML’s leadership, the digitalization of SDFC’s operations will streamline procedures, accelerate loan approvals, and improve overall performance through enhanced governance and oversight.

Commending on the acquisition, BML said the SDFC will be transformed into a Shari’ah-compliant, digital-first subsidiary that offers technology-driven financial services under this strategic initiative with a focus on expanding access to finance for the Micro, Small, and Medium Enterprise (MSME) sector, including underserved groups such as start-ups, women-led businesses, fishermen, farmers, agri-businesses, as well as trade and e-commerce enterprises.

BML detailed that the acquisition of SDFC is founded on a well-defined strategic purpose, utilizing BML’s strong financial standing, broad national network, and expanding digital banking capabilities to advance the digital transformation of MSME banking in the Maldives, while fostering financial inclusion and economic diversification. In this regard, BML detailed that SDFC will act as the main platform to provide customized financial solutions, including a digital lending platform and digital marketplace, along with improved access to finance and financial literacy support for the sector.

BML’s CEO Mohamed Shareef said the MSME sector, served by SDFC, is an important contributor to economic growth, playing a significant role in shaping the growth and innovation of our economy.

“With this acquisition, we remain committed to create a transformative banking experience for MSMEs in the country through the Shari’ah compliant subsidiary,” he added.